Time Irreversibility and Business Cycle Asymmetry

The problem of business-cycle symmetry is addressed within the context of time reversibility. To this effect, the authors introduce a time domain test of time reversibility, the TR test. In an application, they show that time irreversibility is the rule rather than the exception for two well-known representative macroeconomic data sets. This shows that many components of the business cycle have asymmetric fluctuations. The characterization of asymmetry provided by the TR test shows that many series exhibit steepness asymmetry. A few series appear to be either deep or sharp.